Firing & Wrongful Termination

Overview

In the United States, most employers hire employees "at-will," meaning that both the employer and employee may terminate the employment relationship at any time. Employees can quit at any time. Likewise, employers may terminate an employee at any time unless the parties signed an employment contract that sets the duration of employment or the employer seeks to terminate the employee for an illegal cause.

Discrimination

Federal and state laws protect employees from illegal job discrimination. Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against their employees because of their race, skin color, religion, gender or national origin. In addition, Congress has expanded protection against job discrimination to age discrimination with the Age Discrimination in Employment Act of 1967 and disability discrimination with the Americans With Disabilities Act of 1990. The Civil Service Reform Act of 1978 prohibits federal employers from discriminating on the basis of race, color, national origin, religion, sex, age, disability, marital status, political affiliation and sexual orientation.

Retaliation

Both federal and state laws prohibit employers from retaliating against their employees for whistleblowing. The specific law applicable in a particular case depends on the individual circumstances, including the identity of the employer as well as the type of wrongful conduct that the whistleblower disclosed to authorities. For example, the Whistleblower Protection Act of 1989 prohibits the federal government from retaliating against their employees for disclosing illegal conduct, mismanagement, or a waste of funds. Similar protections cover private employees who report on workplace safety or health hazards under the Occupational Safety & Health Act (OSH Act), as well as corporate whistleblowers who report on violations of federal laws under the Sarbanes-Oxley Act.

Additionally, employers may not retaliate against their employees for exercising their rights under the Fair Labor Standards Act of 1938. So, an employer may face a charge of retaliatory discrimination if it fires an employee for complaining about minimum wage or overtime pay to the Department of Labor.

Breach of Contract

Companies often sign contracts with their employees to define the terms of employment. Usually, the contract will state that the employment is at will and that either party may terminate the agreement at any time. However, in some instances, the parties may sign a contract that expressly states the duration of employment and prohibits the employer from terminating the employee during the employment period absent "good cause." Usually, the contract will specify what acts constitute good cause.

Additionally, some states will find an implied contract of continued employment if the employer documented that it will only terminate the employee for good cause. Possible documents that may contain such provisions include an employer policy manual or an employee handbook that outlines the company's discipline or termination protocol.

Breach of Good Faith and Fair Dealing

Some states recognize an implied covenant of good faith and fair dealing in employment relationships. This covenant requires employers to treat their employees fairly. For example, an employer may breach this covenant if it terminates an employee right before a benefit would vest, just to avoid paying a bonus.

Constructive Discharge

A constructive discharge occurs when an employee resigns from a job because the employer has made the working conditions intolerable or permitted such conditions to exist, and a reasonable employee would also have quit when faced with the same conditions. Employees usually face a difficult time proving that a constructive discharge occurred.

Defamation of Character

An employee has been wrongfully terminated if an employer intentionally defamed him to justify his termination, such as falsely accusing an employee of stealing as an excuse to fire him.

Public Policy Exceptions

Most states recognize "public policy" protections in addition to the specific laws prohibiting wrongful dismissal. These protections vary in nature and scope in different jurisdictions, but the premise is the same: The law of that state creates an express or implied public policy which will be undermined if employers are permitted to fire their employees in violation of that public policy. For example, public policy protection prevent employers from firing employees who make worker's compensation claims, since worker's compensation schemes were created by states to protect its citizens.

Remedies

An employee who has been wrongfully terminated must make a claim with the appropriate administrative agency or court that hears actions for wrongful dismissal; the proper location varies depending upon what law or policy the employer violated and the nature of the employment (private or public sector). If a worker successfully establishes that he was worngfully discharged, the two main remedies are reinstatement of the dismissed employee and monetary compensation.

An employee also may have sufficient grounds to file a lawsuit against the employer for damages, such as a defamation or invasion of privacy action, in response to an employer's illegal actions in terminating the employee.